Europe’s budget war starts now

Summary

Brussels Playbook Podcast – Episode Summary

Episode Title: Europe’s budget war starts now
Date: June 18, 2026
Host: Zoya Sheftalovich (Chief EU Correspondent, POLITICO)
Guest: Sarah Wheldon (Policy Editor, POLITICO)
Duration: ~14 minutes

Episode Overview

In this fast-paced, reporting-driven episode, Zoya Sheftalovich and Sarah Wheldon break down the latest political tensions defining the day in Brussels. With EU leaders convening for a rare two-day summit, the episode explores urgent summit topics: the escalating confrontation with China over trade, looming decisions about Europe’s multi-annual budget, the debut of four new leaders at the EU summit table, and how artificial intelligence is transforming the Commission’s approach to EU enlargement. The tone is conversational, insightful, and laced with trademark wit.

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Key Discussion Points and Insights

1. Summit Vibes & Social Media Banter

[00:27 - 01:40]

• Zoya opens with a “conflicted” mood as Brussels prepares for an exceptionally important leaders’ summit.
• Usual quick banter: A comedic exchange about possible names for a European-made social media app (“Boom Scroll”), highlighting the hosts’ informal, playful dynamic.

2. Summit Agenda: China’s Threat and Trade Tensions

[01:40 - 04:31]

• Main Issue: EU’s mounting difficulties with China (“The China Shock 2.0”).

  • Quote:
    “The EU really has a China problem. We're calling it the era of The China Shock 2.0. Its trade practices are killing Europe’s industrial base.”
    — Sarah Wheldon [02:18]
  • The trade deficit between the EU and China reached €360 billion in 2025, with Germany losing over 10,000 industrial jobs per month to Chinese competition.
  • Despite consensus on taking a tougher stance, the word “China” is omitted from formal summit conclusions due to fears of retaliation.
    • Quote:
      “We're so concerned about upsetting China that EU leaders, even though they're talking just about China tonight, they're not going to even say the word China.”
      — Zoya Sheftalovich [03:03]
  • Discussion of China’s dominance in rare earths, green tech, and EVs, and its use of economic coercion.
  • Recent diplomatic tension: Chinese Vice Minister for Commerce implied threats about starting a trade war during talks with the EU’s new trade chief.

• EU’s Toolbox: The Commission is readying measures like tariffs, quotas, and an “anti-coercion instrument” (“trade bazooka”), but concrete action is not expected—just agreement to explore options.

3. Europe’s Budget Battles: Modernization vs Tradition

[04:31 - 07:05]

• Upcoming Budget Discussion: First detailed leader-level debate after the Cypriot presidency laid out a “nego box” (negotiating position on budget allocations).
  • Two main camps:
    1. “Spend for Competitiveness” Camp: Pushes for more funding to help Europe compete with China.
    2. “Keep Traditional Spending” Camp: Wants to protect funds for farms (agriculture) and regional aid.
  • Cohesion and agriculture currently consume 60% of the budget; Cypriots propose reducing this to 41.4%—a formula pleasing neither side.
    • Quote:
      “Farmers get a huge portion of the EU budget right now… The Cypriots have proposed to take their combined share down to 41.4%. That's not enough so far for these frugal countries.”
      — Sarah Wheldon [05:41]
  • Rising political tensions in the Council, with Ireland’s incoming presidency indicating agri spending is still “not enough” for some states.

4. New Faces at the Summit Table

[07:05 - 10:35]

• Four new prime ministers since the last summit—mini-profiles:
  1. Peter Magyar (Hungary):
     • Slightly more pro-Ukraine than Viktor Orbán, but still obstructionist on issues like migration.
     • Memorable summit anecdote:
       “Famously, when all of the other leaders had agreed on something, they kind of got Viktor to step out of the room so they could vote unanimously.”
       — Zoya Sheftalovich [07:52]
  2. Rumen Radev (Bulgaria):
     • Now attending his first summit with a clear political mandate.
     • Voiced skepticism about increasing EU military aid to Ukraine (“Kiev is doomed”) and is signaling resistance on the EU’s 21st sanctions package.
  3. Janez Janša (Slovenia):
     • A veteran but newly returned leader, known for his populist rhetoric and strong pro-Ukraine stance, while opposing the EU’s censure of Israeli figures.
  4. Andris Kulbergs (Latvia):
     • Businessman-turned-politician, brought to power after a drone-related security crisis.
     • Set to prioritize defense and drones at the EU table.

5. AI in Enlargement: The Commission’s New Tools

[10:45 - 12:28]

• The Commission faces a “crushing” enlargement workload as more candidate countries advance.
• Solution: A proprietary AI tool, “GPT at EC,” built in-house since 2024 to avoid US tech dependencies and security issues.
  • Quote:
    “It's not just like, you know, chat GPT. It's called GPT at ec. Catchy. Maybe that should be almost like boom scroll.”
    — Zoya Sheftalovich [11:34]
• AI is used to speed up the vetting of candidate countries’ legislation, but concerns exist about accuracy and the “quality vs speed” trade-off.

6. Community, Birthdays, and Tomorrow’s Weekender Episode

[12:28 - 14:17]

• Zoya invites listener feedback: “If you've used AI out there for work… send us your best or your worst story.”
• Sneak peek: Tomorrow’s Friday “Weekender” edition will dive deeper into the summit and mark 10 years since Brexit with a special interview.
• Notable birthdays: Both Bulgaria’s PM Rumen Radev and EU top diplomat Kaya Callas share a birthday with Paul McCartney.

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Notable Quotes & Memorable Moments

• On the EU’s caution towards China:
  “We’re so concerned about upsetting China that EU leaders, even though they’re talking just about China tonight, they’re not going to even say the word China.”
  — Zoya Sheftalovich [03:03]

• On the budget tug-of-war:
  “Farmers get a huge portion of the EU budget right now. Agriculture and cohesion... account for around 60% of the current EU budget.”
  — Sarah Wheldon [05:41]

• On summit maneuvering:
  “Famously, when all of the other leaders had agreed on something, they got Viktor to step out of the room so they could vote unanimously.”
  — Zoya Sheftalovich [07:52]

• On AI for accession:
  “It’s called GPT at ec. Catchy. Maybe that should be almost like boom scroll.”
  — Zoya Sheftalovich [11:34]

• Birthday banter:
  “Maybe if they need to get him to leave the room, they can be like, we have a present for you just outside in the hallway.”
  — Sarah Wheldon [13:55]

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Timestamps for Important Segments

• 00:27: Brussels summit mood; main issues preview
• 01:40: EU and China – trade tensions, behind-the-scenes diplomacy
• 04:31: EU budget infighting – modernization vs tradition
• 07:05: The four new leaders at the summit table
• 10:45: AI tool for enlargement accession files
• 12:28: Listener engagement and Weekender tease
• 13:43: Birthday shout-outs and lighter moments

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Tone and Language

• Conversational, witty, well-informed, and direct
• Frequent asides and playful banter, with a clear focus on explaining complex policy moves and political dynamics for non-specialists

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Useful For

• Anyone who needs a quick, nuanced update on EU summit politics and trade debates
• Listeners keen on the personalities and maneuvering behind the scenes
• Policy wonks following enlargement, tech in government, or Europe’s response to global competition

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For deeper dives into these topics, be sure to check tomorrow’s Weekender edition.

Transcript

[Zoya Shiktolovich]

So good, so good, so good.

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[Zoya Shiktolovich]

Good morning. It's Thursday, June 18, and this is the Brussels Playbook podcast. The vibe in Brussels today is conflicted as EU leaders hunker down to discuss the hot button issues of the day, like China's threat to European industry and the bloc's next long term budget. Also on the pod, expect a few new faces around that summit table. We check in with the four new heads of government to explain where they stand on the various contentious issues. Issues. And with countries clamoring to join the eu, the commission's enlargement department is using AI to deal with the workload. I'm Zoya Shiktolovich and with me today is one of our policy editors, Sarah Whedon. Hey, Sarah.

[Sarah Wheldon]

Hey, Zoya.

[Zoya Shiktolovich]

We did a call out yesterday for good names for a European made social media platform. You've got one?

[Sarah Wheldon]

I have a truly terrible one. Oh, Boom Scroll. Okay, hear me out. I mean it's terrible, but okay, so unbeam and France is like up a cheesy party for like tweens for like, for adolescents. So instead of Doom scroll, it's Boom Scroll. You can even market it as a child safe social media app.

[Zoya Shiktolovich]

To me it sounds like Boomer scroll complete opposite.

[Sarah Wheldon]

I'll sign up for Boomer scroll.

[Zoya Shiktolovich]

Same. Seems like you'd get a lot of memes on that. All right, Sarah, time for us to talk turkey. It is a pretty big day here in Brussels. There's a big EU leaders summit. So all of the EU's 27 leaders are gathering in town for dinner. And it's actually going to keep going into tomorrow, which is quite unusual. Recently there haven't been too many of these two day affairs. Some of them are coming straight from the G7. Also, Volodymyr Zelensky is going to be here for dinner tonight for a bit of a discussion on Ukraine. Ukraine really wants to open more clusters for its EU membership bid, so that's what he's in town to try to convince the leaders to do. But anyway, the big discussion of the night is actually going to be China.

[Sarah Wheldon]

Yeah, and I mean, look, the EU really has a China problem. We're calling it the era of The China Shock 2.0. Its trade practices are basically killing Europe's industrial base. I mean, look, the trade deficit was 360 billion euros. That's with a B in 2025. And Germany is losing more than 10,000 industrial jobs a month due to competition from China. So Europe really has kind of woken up to the need to do something about this.

[Zoya Shiktolovich]

On the other hand, it might have woken up, but it's also very cautious because the Chinese have been quite aggressive in their various trade measures in the past. And in fact, you know, the word China does not actually appear in the EU leaders draft conclusions, which we've seen here at Politico.

[Sarah Wheldon]

I'm sure that's totally going to fool Beijing.

[Zoya Shiktolovich]

Yeah, but that's the thing. Like, we're so concerned about upsetting China that EU leaders, even though they're talking just about China tonight, they're not going to even say the word China.

[Sarah Wheldon]

Yeah. I mean, look, China controls the rare earths needed for everything from advanced computers to weapons. And it also dominates the green tech and electric vehicle market. And of course, we all benefit from cheap Chinese products.

[Zoya Shiktolovich]

Yeah. And, you know, China is not afraid to use those levers at its disposal to pressure those that displease it. And actually, Chinese Vice Minister for Commerce Ling Xi was in Brussels for talks with EU officials earlier this month. He was meeting with Dieter Joel Jorgensen, who's their new head of DG trade, that's the Commission's trade department. And he asked her, does the EU want to start a trade war? It was kind of a threat. Right. Really an implicit threat. And she said no, it didn't.

[Sarah Wheldon]

The answer, of course, is no. But at the same time, we see Europe starting to arm. The Commission has prepared a toolbox with various ways that it can act against unfair Chinese trading practices. These include things like tariffs and quotas if a flood of imports damage European industry. There's also ways to kind of deal with the fact that China basically makes way more of stuff than its own citizens can consume. And so they send them here to sell really cheap. And then there's also this, you know, trade bazooka that we talk about, the anti coercion instrument. So, you know, the leaders are going to talk, they're going to talk about what maybe they might be willing to dip their toes into considering using.

[Zoya Shiktolovich]

Yeah, we're unlikely to see any concrete action that comes out of this. We're just probably going to see decision to look into this further. Maybe we might see something further on this than we have in the past. So that's going to be the China Talk tonight. We should also say there is going to be a big budget discussion tomorrow and it's going to be the first time that EU leaders get a chance to really get into it with one another after the Cyprus presidency of the Council of the EU put up this nego box, which our listeners might be familiar with. That's that kind of estimate where they laid out how they wanted money, EU budget money to be spent. That happened last week. And we know that the General Affairs Council, that's European affairs ministers, discussed this nego box on Tuesday. And now it's EU leaders turn. And of course, as always, there are two warring camps that have formed in the European Council. I've got a story out about this very thing this morning with a few of my colleagues. You've got on one side those who say, and this is this China thing again, we need to spend money to ensure Europe is competitive in the face of challenges for China versus those who are saying, look, sure, but actually we want more money for the traditional spending like farms. Yeah.

[Sarah Wheldon]

And I mean, this is kind of this existential question for the EU because, well, especially the EU budget has basically been giving out cash to regions. And yeah, farmers get a huge portion of the EU budget right now. Agriculture and cohesion, which are these kind of local goodies that get given out. They account for around 60% of the current EU budget. The Cypriots have proposed to take their combined share down to 41.4%. That's not enough so far for these

[Zoya Shiktolovich]

frugal countries, and that's these Northern Nordics. It's like Germany, Germany, the Netherlands, Austria. But it's also not enough in terms of the money that the other camp wants. These friends of cohesion.

[Sarah Wheldon]

Yeah, exactly. It's going too far for these countries who want to see the EU stick to its traditional spending priorities, you know,

[Zoya Shiktolovich]

better than others because you're the agri editor. But you know, that's like Italy, Spain, France, they want more money for this stuff. Exactly.

[Sarah Wheldon]

And you know, they're bracing for. For farmer protests. And you know, we really interesting. We heard from the EU Affairs Minister, Thomas Byrne from Ireland, which will take over the negotiat negotiations first of July. Right, exactly. From the Cypriots. And he's going to need to be an honest broker when he actually takes over the Council presidency. But he's also said that agriculture spending is simply not enough for the Irish. So. And that's a direct quote, so we will see what happens.

[Zoya Shiktolovich]

Absolutely. Sarah, our next story. It's actually kind of related to the previous story because it's also about the European Council summit. Our colleague Seb Starchevic has gone around and done some little mini profiles that are up online now about the four new prime ministers who've been elected to office since the last summit and who are going to be taking a seat at that Yuko table for the first time.

[Sarah Wheldon]

And so that one that comes to mind first is the one that we've talked about many times here already, Peter Magyard. This will be his first Yuko. You know, leaders are looking forward to being able to, like, make some progress on things like Ukraine accession, Russia sanctions. In the past, you know, they've either had to not do it at all or hope that Viktor Orban has to go to the bathroom.

[Zoya Shiktolovich]

But literally, I mean, that's a literal thing that happened during one European Council summit. Famously, when all of the other leaders had agreed on something, they kind of got Victor to step out of the room so they could vote unanimously.

[Sarah Wheldon]

Yeah. So that's one person I'm looking at. And that person is maybe going to be a little more pro Ukraine than we have seen from his predecessor. But it's not. It's not a consistent trend.

[Zoya Shiktolovich]

Yeah. And certainly, look, he might be more pro Ukraine than Orban, but he's certainly not, you know, knocking down the door of the EU to be helping out. And he's also still pretty consistently in that obstructionist camp when it comes to things like migration. But we have some other people around the table who might take over Viktor Orban's mantle when it comes to the Ukraine debate. And that primarily is Bulgaria's new pm, Ruman Radev.

[Sarah Wheldon]

Yeah, he has technically been at Yuko before, but this is the first time that he'll really be there with a political mandate. And he has been arguing against. Against increasing EU military aid to Ukraine. He said Kiev is doomed.

[Zoya Shiktolovich]

And he's also actually signaled. The Bulgarians have been signaling that they might hold up the 21st package of sanctions that the EU is trying to pass. This is. It has been presented and currently the capitals are examining this package, but it hasn't been passed yet. And we're getting a little bit of indication that the Bulgarians are chafing at it. We're not quite sure what it is exactly they want, what their problem is. They haven't really explained it yet, but there is some indication from the briefings we've been having around town that maybe Bulgaria might be holding this up.

[Sarah Wheldon]

Yeah. So maybe not as much of an Orban but a Fitzo, the Slovak leader, who sort of uses these sanction pushes to get stuff to meet his domestic needs.

[Zoya Shiktolovich]

Yeah. And then we've got Slovenia's Janus Jansha. He's. He's also an old hand at the UK table, but new this time round.

[Sarah Wheldon]

Yeah. So Janss is kind of one of these people who's a mixed bag. He's been Slovenia's Prime Minister three times before. He's technically a member of the Center Right European People's Party, but avowedly not a. An ally of Commission President Ursula von der Leyen. He uses a lot of populist, pro Trump rhetoric. He is a staunch supporter of Ukraine, and he's seen as one of the biggest opponents of Europe's efforts to punish Israel's hardline National Security Minister, Itamar Ben gvir.

[Zoya Shiktolovich]

Yeah. So then let's get to our last member of the gang, the last newbie, Andres Kulberg. He's also in that pro Ukraine camp. He is the new Latvian Prime Minister. Yeah.

[Sarah Wheldon]

And he actually got this job after drone incursions in Latvia led to a political crisis that led to a fall of its leader. He's a former businessman, not actually a lot of political experience, but one of his major priorities will be defenses against drones. So probably a little bit more of a traditional contribution to the European Council table.

[Zoya Shiktolovich]

Yep. Well, that's it, gang. That's the. The new faces around the table.

[Sarah Wheldon]

Foreign.

[Zoya Shiktolovich]

Our last story today. It's another one from our colleague Seb Star Chevich. He's been prolific. Well done, Seb. And our colleague Gerardo Fortuna. They're talking about how there's an AI tool that the European Commission is using to handle a heavy workload when it comes to the enlargement work that it's trying to do, because it's got so many countries that are progressing through their enlargement accession negotiations that it's basically not able to keep up.

[Sarah Wheldon]

Yeah. I mean, it's putting a lot of stress on DGNs to the Commission department that's responsible for this. And, you know, what they have to do is make sure go through all the laws from all these candidate countries and make sure that they're compatible with European Union laws. And that means looking through bills, amendments, you know, hundreds and hundreds of pages. The idea is that AI can kind of speed this all up.

[Zoya Shiktolovich]

Yeah. And they're using a proprietary tool that's been built by the Commission itself to do it. It's not just like, you know, chat GPT. It's called GPT at ec. Catchy. Maybe that should be almost like boom scroll. I love that for us. Well, anyway, it was built in 2024 because there were some big security fears around using US tech like ChatGPT. So, yeah, that's what they're using at the moment. And it's essentially trying to clear the decks when it comes to this legislation. It's very hard to look at. Now, Seb and Jurata spoke with some people who are kind of part of the process in these candidate countries and some of them were a bit concerned and saying, look, I don't know about this, like using AI to go through our legislation, like this is pretty high stakes stuff, but the flip side of it is that, you know, the workload is pretty significant. The speed at which it's going needs to be pretty fast.

[Sarah Wheldon]

Yeah. I mean, the Commission is not immune from the quality versus speed tension.

[Zoya Shiktolovich]

Yeah. And that's actually what I wanted to ask Alisonas about today. I'm wondering, because everywhere I go people are talking about how they're using AI. And we've actually asked this question before, but I'd love to hear whether, you know, if you've used AI out there for work, has it saved you time? Has it given you a complete disaster, shit sandwich? Send us your best or your worst story. I'd love to hear it. Hey, Sarah, before we go, what's going to be on the weekender tomorrow?

[Sarah Wheldon]

Well, you, I hope. I'm going to try to pin you down here. So both of us are going to be on the ground at the Yuko, talking about what the leaders are having for dinner and more importantly, what they're discussing. So we're going to drill even deeper to some of the questions that you and I have just been talking about. Now, as far as China, as far as the budget and then separately, you might not have even noticed because it was so long ago and we're distracted by so many other things. But the Brexit vote that just completely transformed the continent of Europe and the European union, that happened 10 years ago, right around this time. And so Ann McAvoy will be bringing us an interview that she set up with longtime UK politician Jeremy Hunt and German Ambassador Peter Altmeyer, kind of talking about that referendum anniversary.

[Zoya Shiktolovich]

Interesting. Well, that's almost it from us today, but we've got a bit of a birthday shout out. Did you know that it's actually Ruman Radev's birthday today on Yuko day? He's turning 63. Do you reckon they'll have a cake

[Sarah Wheldon]

maybe or maybe if they need to get him to leave the room, they can be like, we have a present for you just outside in the hallway.

[Zoya Shiktolovich]

Oh, I can see it. I wonder what they would get him. All right, there's another shout out today also, actually. Kaya Callis, the EU's top diplomat. She's turning 49 today. Happy birthday.

[Sarah Wheldon]

I just buy her books. Oh, that's easy one.

[Zoya Shiktolovich]

Yeah. And they share a birthday with Paul McCartney.

[Sarah Wheldon]

I'm trying to think of a Beatles reference or something.

[Zoya Shiktolovich]

Let it be. And that's about it from us today. We will let it be. It's done. It be. It be. Sarah, leave us a review, give us a rating. Share us with your group chats.

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